Outsourced manufacturing is a method of making products or services in which a first enterprise researches and develops products and then contracts with one or more other enterprises to actually make and deliver the products, or their components or subassemblies. Large business enterprises involved in developing many different products and services have rapidly turned to outsourced manufacturing in recent years as a way to provide flexibility in their operations. For example, if a research enterprise has developed a product and suddenly receives a large increase in orders for the product, the research enterprise can contract with multiple vendors to make and deliver the product, and then discontinue the contracts when order volume decreases. Without outsourced manufacturing, an enterprise is required to manage regular changes in manufacturing capacity, at significant direct and indirect cost to the enterprise.
However, one disadvantage of using outsourced manufacturing on a large-scale basis is that the outsourcing enterprise loses a degree of control over the manufacturing process. For example, if a contract manufacturer fails to receive timely deliveries of needed parts from one or more suppliers, the manufacturer's production schedule may slip, and the outsourcing enterprise cannot deliver products to its customers on time. Moreover, the outsourcing enterprise typically receives no information about the existence or nature of such shortages or other problems that arise far down the supply chain, because the outsourcing enterprise has no direct contractual relationship or communication with the downstream suppliers. The problems become known only when the contract manufacturer informs the outsourcing enterprise about a change in delivery schedule. When the outsourcing enterprise is a very large business organization with numerous products and an annual sales volume amounting to billions of dollars, these problems become acute and unacceptable.
Based on the foregoing, there is a need for a way to provide management of an outsourcing enterprise with visibility of events occurring in all parts of the supply chain, i.e., end-to-end supply chain visibility. In addition, management needs analysis tools to understand the impact of events occurring deep in the supply chain and to suggest relevant resolution options.
One approach to this need is to provide an enterprise resource planning (ERP) software system at the outsourcing enterprise, and require all supply chain partners of the outsourcing enterprise to deploy and use the same ERP system so that compatible data files can be interchanged. Providers of ERP software systems include Baan, Oracle, SAP AG, and others. Unfortunately, deployment of such ERP systems including licensing, installation, and training is extremely expensive. The cost is normally beyond the resources of medium-sized or smaller supply chain partners who otherwise produce quality products and form essential parts of the supply chain.
Still another need in this context relates to communicating instructions and information to supply chain partners who are located far down the supply chain from the outsourcing enterprise. In a typical enterprise, when one or more new orders are received for a particular product, the enterprise will initiate and communicate one or more new demand signals to its contract manufacturers, asking them to start making products that the enterprise can use to fulfill its orders. If the contract manufacturers need new supplies of parts, they must contact all appropriate vendors with separate signals or requests to supply the parts. If such suppliers also need component materials or other parts, they must send separate signals or requests further down the supply chain. This process results in delay in ultimately completing the products needed by the enterprise, and increases manufacturing costs. There is a need for the outsourcing enterprise to communicate new demand signals as far down the supply chain as necessary in a substantially concurrent way, and as directly as possible, so that all supply chain partners know as soon as possible that additional products are needed by the enterprise.
Similarly, there is a need to communicate other kinds of signals, requests or instructions from the outsourcing enterprise to all supply chain partners. For example, the enterprise may wish to send material move signals, supply status requests, and receive exception conditions to or from all entities involved in the supply chain.
Another deficiency of past approaches pertains to decision-making. In general, existing systems provide no automated way to request action when problems arise, and no way to guarantee that appropriate action is taken in response to problems. Thus, there is a need for a way to issue alert messages in response to problems, and to enforce an organized process of responding to and acting on the alerts.
There is also a need for a way to facilitate direct communication among the enterprise and downstream supply chain partners with which the enterprise has no direct contractual or transactional relationship.